Pearson's share price is down more than 3%, the biggest faller in early trading among FTSE 100 companies, after the publisher of the Financial Times surprised investors by reporting a profits downgrade for 2012.

Pearson, which has developed a reputation in the City for consistently beating its own forecasts, has downgraded operating profit and earnings per share for 2012.

Pearson said weak market conditions in the fourth quarter – key selling season for corporate advertising, publishing sales at its Penguin book arm and higher education business – means it expects operating profits of £935m for 2012.

Adjusted earnings per share is forecast at 84p.

The consensus among City analysts was for Pearson to report operating profits of £942m and EPS of 84.9p.

While the lowering of estimates is considered "light", Pearson has developed a reputation in the city for consistently beating its own forecasts.

FT Group, home to the Financial Times, expects to report "good revenue growth" for 2012.

Pearson said growth at the division, which includes a 50% share in the publisher of the Economist, came despite a deterioration in advertising sales in the fourth quarter.

FT Group digital and subscription-based revenues continued to grow in 2012, although profits will be "significantly" lower year on year because of "further actions to accelerate the shift from print to digital".

The division's profits will also be hit by the loss of income from FTSE International after Pearson sold its 50% interest to the London Stock Exchange for £450m in December 2011.

Penguin, which is to be merged in a joint venture with rival Random House, benefited from a good fourth quarter and "traded in line with our expectations in its key selling season".

The division will report flat revenues on a constant currency basis year on year – in spite of tough conditions in the physical sales market – although perhaps tellingly Pearson does not say how Penguin's performance rates on the key metric of like-for-like sales.

In Pearson's education division, which accounts for 75% of the company's business, its North American division has endured a tough year.

The company said US school and higher education publishing industries declined by 11% in the first 11 months of 2012, which hit Pearson's operations.

"Our services and digital-learning revenues continued to grow rapidly and we benefited from a strong performance from recent acquisitions and tight cost control," said Pearson.

"In general, Pearson's businesses continue to face tough market conditions and structural industry change which we see continuing into 2013," it added.

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